Hayward council delays decision on proposal to raise hotel tax to as much as 14% and sends it back to committee

The Hayward City Council voted unanimously on May 6 to table a staff recommendation and refer discussion of the city’s transient occupancy tax (TOT) proposal back to the Budget & Finance Committee.

Interim Finance Director Sharif Edmond presented background and staff analysis supporting an increase in the city’s TOT rate from the current 8.5% to as much as 14% effective July 1, 2025. Edmond said voters in November 2020 approved a measure (referred to at the meeting as Measure N) authorizing the city to increase TOT up to 14%. Edmond noted the city currently also collects a 2% excise tax; therefore a full 14% TOT plus the excise tax would appear to a hotel customer as a 16% tax on the room rate.

Edmond and staff presented conservative revenue projections: current annual TOT receipts of about $3.1 million and projected additional revenue ranging from roughly $500,000 to $1.5 million for the next fiscal year if the rate were raised, with higher estimates possible but treated cautiously in budgeting. Edmond later clarified for council that his draft budget submission conservatively assumed a 12.5% TOT projection, not the 14% staff recommendation.

Several council members asked about a phased approach (for example, raising the rate incrementally) and whether the council should consider a smaller initial increase; others requested comparisons with neighboring jurisdictions and whether those comparisons included any local excise taxes. Councilmember Bonilla said she recalled committee discussions considering 12% and asked whether a phased approach might avoid a large immediate jump for hoteliers. Councilmember Roach asked staff to provide documentation on whether other cities’ published TOT rates included similar excise taxes to ensure apples-to-apples comparisons.

Hoteliers testified about current market conditions. Sajid (identified as a hotelier who supplied industry data) told council the average daily rate for comparable local hotels was about $101 (down from $143 in 2019) and warned that an effective 16% tax burden could discourage bookings and further depress occupancy. Other hotel industry speakers said Hayward could become a higher-tax outlier in the region and urged caution.

After discussion, Mayor Salinas moved — and Mayor Pro Tem Roach seconded — a motion to table the item and refer it to the Budget & Finance Committee for more detailed analysis, including whether comparable jurisdictions include excise taxes in published rates, phased approaches, and consideration of timing relative to upcoming regional events. The motion passed unanimously (7–0). Staff said they could return with comparative analysis and clearer phased-implementation options and confirmed they had budgeted a conservative TOT assumption (12.5%) in the draft budget pending council direction.